Market Watch: Calls for action over ACT home building

What’s going wrong with home building in the nation’s capital?
Figures this week that showed that building approvals hit new highs nationally but there is concern that in Canberra things are taking a turn for the worse. The Property Council of Australia says that in the ACT there was a drop of more than 25 per cent in trend terms in the number of approvals this January compared with 2014 levels. The Property Council’s ACT executive director Catherine Carter says that reforms are needed in order to reverse the weakness of the region: “The ACT is simply not benefitting from domestic and foreign investment at the moment and there is also a potential emerging issue around building approvals not converting to actual starts due to costs, delays and obstructive policy settings.”
While there is continued pressure on the government and regulators to curb foreign investment, Carter says that would be a bad thing for Canberra and surrounding areas: “We can’t afford to be discouraging foreign investment, which is needed to turning approvals into actual builds.” She says that building is a powerhouse of the economy and policy reforms are needed to avoid it being stunted.Source: Property Council of Australia

Perth has 10 per cent fewer homeowners
There has been a fall of 10 per cent in the number of people who own their homes outright in Perth over a 20-year period. A study of census data by the think tank Committee for Perth shows that from 1991 to 2011 the proportion of homes that were fully owned declined from 37.2 per cent to 28.1 per cent. During that time the proportion of people with a mortgage rose from 32.5 per cent to 38 per cent. The think tank’s chief executive Marion Fulker told TheWestern Australian that while more people are buying a home fewer are reaching full ownership. She said that 30-year mortgages have become more common, house prices have increased and the ratio of home loan repayments to income have increased. Fulker said that more affordable housing was required.Source: The Western Australian

WA needs a five point plan for the housing market
The Real Estate Institute of Western Australia has called for the state government to implement a five point plan to improve the housing market. Most importantly REIWA is urging the government not to burden the sector with taxes at a time when the market is “fragile” and buyers are “cautious”.
REIWA president David Airey commented: “The falling population growth rate and increasing number of properties on the market means that the year ahead is likely to be weaker for sales and the government needs to prepare for that.” He said that while lower sales volumes meant reduced stamp duty revenues it was not right to burden those who did want to buy a home with additional costs to plug the gap.
The institute also wants the state to change the First Home Buyers grant back to a uniform application; it was changed in 2013 from a $7,000 payment across the board to $10,000 for those buying a new home but just $3,000 for those choosing an existing property.
Other recommendations in REIWA's pre-budget submission include stamp duty relief for off-the-plan-developments to nurture increased density, and removing land tax aggregation rules that penalise investors.Source: REIWA

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